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25 Dal dualismo alla marginalizzazione Marginalizzazione è lanuova forma di discriminizzazione introdotta dal Capitalismo Triadico Marginalizzazione è lanuova forma di discriminizzazione introdotta dal Capitalismo Triadico DUALISMO = Dipendenza sociale e economica DUALISMO = Dipendenza sociale e economica MARGINALIZzazione = Esclusione MARGINALIZzazione = Esclusione The countries that were reacting to this process by establishing antagonist economic and political centers were destabilized politically…for example Argentina and Brazil in the 1980s, South Korea and Japan in the 1990s, Yugoslavia and Iraq in the late 1990s…and so on… The countries that were reacting to this process by establishing antagonist economic and political centers were destabilized politically…for example Argentina and Brazil in the 1980s, South Korea and Japan in the 1990s, Yugoslavia and Iraq in the late 1990s…and so on…

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38 The aim of lecture 5 is: To understand the historical transformation of the capitalist enterprise To understand the historical transformation of the capitalist enterprise To understand the role of the transnational corporations in the global economy To understand the role of the transnational corporations in the global economy

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40 THE LOCAL FIRM IN A HISTORICAL PERSPECTIVE The local enterprise is part and belongs to the local production system, it uses: local resources local resources local customs and rules local customs and rules and it is concerned with the satisfaction of local needs and it is concerned with the satisfaction of local needs The artisan is the central figure The artisan is the central figure It is ‘ between ’ the formal and informal sector Formal:the market - commercialized relations - hired labor Formal:the market - commercialized relations - hired labor Informal:the family - the exchange of services - uncompensated labor Informal:the family - the exchange of services - uncompensated labor Areas in which there has been the concentration of this type of productive fabric has been lately called INDUSTRIAL DISTRICTS Areas in which there has been the concentration of this type of productive fabric has been lately called INDUSTRIAL DISTRICTS

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41 MANAGEMENT R&D DISTRIBUTIONPRODUCTION FINANCE Stage 2: firm at national and international level These functions are externalized

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42 THE NATIONAL CAPITALIST FIRM Change to its advantage the market ’ s rules, the commoditization of the relations governing output, the fulfillment of needs through consumption Change to its advantage the market ’ s rules, the commoditization of the relations governing output, the fulfillment of needs through consumption The internal division of labor increases The internal division of labor increases The capitalist entrepreneur is the central figure The capitalist entrepreneur is the central figure THE NATIONAL CAPITALIST FIRM is the result of the formation of the national markets THE NATIONAL CAPITALIST FIRM is the result of the formation of the national markets Split between community life and production system Split between community life and production system The national market is very different from the local market The national market is very different from the local market There is the invasion of local markets by firms that are both internal and external to them There is the invasion of local markets by firms that are both internal and external to them Enhanced competition changes the structure of the political powers Enhanced competition changes the structure of the political powers

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43 FROMNATIONAL TO INTERNATIONAL Competition produces an homologation of the local communities embodied in the national market to the economic, political and cultural principles held to be advanced and coincident with the dominant companies (cultural hegemony – A. Gramsci) Competition produces an homologation of the local communities embodied in the national market to the economic, political and cultural principles held to be advanced and coincident with the dominant companies (cultural hegemony – A. Gramsci) The enlargement of the activities of the firm will create new forms of monopoly, industrial alliances and political privileges, limiting competition The enlargement of the activities of the firm will create new forms of monopoly, industrial alliances and political privileges, limiting competition The enlargement of the activities brings also to a surplus that is exported: the firm internationalizes The enlargement of the activities brings also to a surplus that is exported: the firm internationalizes

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44 What is a Multinational Firm ? According to Buckley and Casson (1976, 1991): An MNE may be defined as an enterprise which owns and controls activities in different countries or is an enterprise which owns and controls assets in more than one country (Casson 1979) or, according to Caves (1982) a firm with at least one production subsidiary abroad. The origin of the firm is still distinguishable by its national origins. But, production systems and local markets are further separated and raw material sources and sales outlets are fragmented Implications for: The PLANNING of the national economy The PLANNING of the national economy The POLITICAL control on production The POLITICAL control on production The reduction of the role of TRADE UNIONS The reduction of the role of TRADE UNIONS

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49 Of the 100 largest economies in the world, 51 are corporations; only 49 are countries (based on a comparison of corporate sales and country GDPs). Of the 100 largest economies in the world, 51 are corporations; only 49 are countries (based on a comparison of corporate sales and country GDPs). The Top 200 corporations' sales are growing at a faster rate than overall global economic activity. Between 1983 and 1999, their combined sales grew from the equivalent of 25.0 percent to 27.5 percent of World GDP. The Top 200 corporations' sales are growing at a faster rate than overall global economic activity. Between 1983 and 1999, their combined sales grew from the equivalent of 25.0 percent to 27.5 percent of World GDP. The Top 200 corporations' combined sales are bigger than the combined economies of all countries minus the biggest 10. The Top 200 corporations' combined sales are bigger than the combined economies of all countries minus the biggest 10. The Top 200s' combined sales are 18 times the size of the combined annual income of the 1.2 billion people (24 percent of the total world population) living in ''severe'' poverty (less than 1 USD/day). The Top 200s' combined sales are 18 times the size of the combined annual income of the 1.2 billion people (24 percent of the total world population) living in ''severe'' poverty (less than 1 USD/day). While the sales of the Top 200 are the equivalent of 27.5 percent of world economic activity, they employ only 0.78 percent of the world's workforce. While the sales of the Top 200 are the equivalent of 27.5 percent of world economic activity, they employ only 0.78 percent of the world's workforce. Between 1983 and 1999, the profits of the Top 200 firms grew 362.4 percent, while the number of people they employ grew by only 14.4 percent. Between 1983 and 1999, the profits of the Top 200 firms grew 362.4 percent, while the number of people they employ grew by only 14.4 percent. The Rise of Corporate Global Power

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50 A full 5 percent of the Top 200s' corporations combined workforce is employed by Wal-Mart, a company notorious for union-busting and widespread use of part-time workers to avoid paying benefits. A full 5 percent of the Top 200s' corporations combined workforce is employed by Wal-Mart, a company notorious for union-busting and widespread use of part-time workers to avoid paying benefits. The discount retail giant is the top private employer in the world, with 1,140,000 workers, more than twice as many as No. 2, DaimlerChrysler, which employs 466,938. The discount retail giant is the top private employer in the world, with 1,140,000 workers, more than twice as many as No. 2, DaimlerChrysler, which employs 466,938. U.S. corporations dominate the Top 200, with 82 slots (41 percent of the total). Japanese firms are second, with only 41 slots. U.S. corporations dominate the Top 200, with 82 slots (41 percent of the total). Japanese firms are second, with only 41 slots. Of the U.S. corporations on the list, 44 did not pay the full standard 35 percent federal corporate tax rate during the period 1996-1998. Of the U.S. corporations on the list, 44 did not pay the full standard 35 percent federal corporate tax rate during the period 1996-1998. Seven of the firms actually paid less than zero in federal income taxes in 1998 (because of rebates). These include: Texaco, Chevron, PepsiCo, Enron, Worldcom, McKesson and the world's biggest corporation General Motors. Seven of the firms actually paid less than zero in federal income taxes in 1998 (because of rebates). These include: Texaco, Chevron, PepsiCo, Enron, Worldcom, McKesson and the world's biggest corporation General Motors. Between 1983 and 1999, the share of total sales of the Top 200 made up by service sector corporations increased from 33.8 percent to 46.7 percent. Gains were particularly evident in financial services and telecommunications sectors, in which most countries have pursued deregulation. Between 1983 and 1999, the share of total sales of the Top 200 made up by service sector corporations increased from 33.8 percent to 46.7 percent. Gains were particularly evident in financial services and telecommunications sectors, in which most countries have pursued deregulation. The Rise of Corporate Global Power

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51 How does the modern transnational enterprises operate? 1. De-localization -through foreign direct investments; 2. De-centralization -through international networks of production- which are not necessarily in a foreign country.

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52 Example of Nike Shoe Company Nike employs approximately 23,000 people worldwide Nike employs approximately 23,000 people worldwide There are approximately 12,000 Nike employees in the United States There are approximately 12,000 Nike employees in the United States There are approximately 109 apparel contract factories and 12 equipment contract factories in the U.S., providing more than 13,000 jobs to local communities. There are approximately 109 apparel contract factories and 12 equipment contract factories in the U.S., providing more than 13,000 jobs to local communities. In FY'01, approximately 14% of Nike apparel (shoe) was made in the U.S. The remainder is manufactured by independent contractors located in 33 countries In FY'01, approximately 14% of Nike apparel (shoe) was made in the U.S. The remainder is manufactured by independent contractors located in 33 countries Revenue FY'03: Nike reported revenues of $10.7 billion (10 times the GDP of Mongolia) Revenue FY'03: Nike reported revenues of $10.7 billion (10 times the GDP of Mongolia) Including manufacturers, shippers, retailers and service providers, nearly one million people help bring Nike to athletes everywhere Including manufacturers, shippers, retailers and service providers, nearly one million people help bring Nike to athletes everywhere Some 40% of all Nike shoes are made in China Some 40% of all Nike shoes are made in China Nike has 59 factory suppliers in China Nike has 59 factory suppliers in China

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53 Example of Wal-Mart $220 billion a year (more in revenues than the entire GDP of Israel and Ireland combined). $220 billion a year (more in revenues than the entire GDP of Israel and Ireland combined). The owner S. Robson Walton is ranked by London ’ s "Rich List 2001" as the wealthiest human on the planet, having sacked up more than $65 billion (£45.3 billion) in personal wealth and topping Bill Gates as No. 1. The owner S. Robson Walton is ranked by London ’ s "Rich List 2001" as the wealthiest human on the planet, having sacked up more than $65 billion (£45.3 billion) in personal wealth and topping Bill Gates as No. 1. Seventy-one percent of the toys sold in the U.S. come from China, and Wal-Mart now sells one out of five of the toys we buy. Seventy-one percent of the toys sold in the U.S. come from China, and Wal-Mart now sells one out of five of the toys we buy. The National Labor Ccommittee interviewed workers in China ’ s Guangdong Province who toil in factories making popular action figures, dolls, and other toys sold at Wal- Mart. The National Labor Ccommittee interviewed workers in China ’ s Guangdong Province who toil in factories making popular action figures, dolls, and other toys sold at Wal- Mart. In "Toys of Misery," a shocking 58-page report that the establishment media ignored, NLC describes: 13- to 16-hour days molding, assembling, and spray-painting toys—8 a.m. to 9 p.m. or even midnight, seven days a week, with 20-hour shifts in peak season. In "Toys of Misery," a shocking 58-page report that the establishment media ignored, NLC describes: 13- to 16-hour days molding, assembling, and spray-painting toys—8 a.m. to 9 p.m. or even midnight, seven days a week, with 20-hour shifts in peak season.

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54 Even though China ’ s minimum wage is 31 cents an hour—which doesn ’ t begin to cover a person ’ s basic subsistence-level needs—these production workers are paid 13 cents an hour. Even though China ’ s minimum wage is 31 cents an hour—which doesn ’ t begin to cover a person ’ s basic subsistence-level needs—these production workers are paid 13 cents an hour. Workers typically live in squatter shacks, seven feet by seven feet, or jammed in company dorms, with more than a dozen sharing a cubicle costing $1.95 a week for rent. They pay about $5.50 a week for lousy food. They also must pay for their own medical treatment and are fired if they are too ill to work. Workers typically live in squatter shacks, seven feet by seven feet, or jammed in company dorms, with more than a dozen sharing a cubicle costing $1.95 a week for rent. They pay about $5.50 a week for lousy food. They also must pay for their own medical treatment and are fired if they are too ill to work. The work is literally sickening, since there ’ s no health and safety enforcement. Workers have constant headaches and nausea from paint-dust hanging in the air; the indoor temperature tops 100 degrees; protective clothing is a joke; repetitive stress disorders are rampant; and there ’ s no training on the health hazards of handling the plastics, glue, paint thinners, and other solvents in which these workers are immersed every day. The work is literally sickening, since there ’ s no health and safety enforcement. Workers have constant headaches and nausea from paint-dust hanging in the air; the indoor temperature tops 100 degrees; protective clothing is a joke; repetitive stress disorders are rampant; and there ’ s no training on the health hazards of handling the plastics, glue, paint thinners, and other solvents in which these workers are immersed every day.

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55 Wal-Mart continue… More than 65,000 companies supply the retailer with the stuff on its shelves, and it constantly hammers each supplier about cutting their production costs deeper and deeper in order to get cheaper wholesale prices More than 65,000 companies supply the retailer with the stuff on its shelves, and it constantly hammers each supplier about cutting their production costs deeper and deeper in order to get cheaper wholesale prices Behind this manufactured cheerfulness, however, is the fact that the average employee makes only $15,000 a year for full-time work. Most are denied even this poverty income, for they ’ re held to part-time work. While the company brags that 70% of its workers are full-time, at Wal-Mart "full time" is 28 hours a week, meaning they gross less than $11,000 a year. Behind this manufactured cheerfulness, however, is the fact that the average employee makes only $15,000 a year for full-time work. Most are denied even this poverty income, for they ’ re held to part-time work. While the company brags that 70% of its workers are full-time, at Wal-Mart "full time" is 28 hours a week, meaning they gross less than $11,000 a year. Health-care benefits? Only if you ’ ve been there two years; then the plan hits you with such huge premiums that few can afford it—only 38% of Wal-Marters are covered. Health-care benefits? Only if you ’ ve been there two years; then the plan hits you with such huge premiums that few can afford it—only 38% of Wal-Marters are covered. Thinking union? Get outta here! "Wal-Mart is opposed to unionization," reads a company guidebook for supervisors. Thinking union? Get outta here! "Wal-Mart is opposed to unionization," reads a company guidebook for supervisors. SHENZHEN, China. Most of the 2,100 workers here are poor migrants from the countryside who have come to this industrial hub in southern China for jobs that pay about $120 a month. A sign on the wall reminds them of their expendability in a nation with hundreds of millions of surplus workers: "If you don't work hard today, tomorrow you'll have to try hard to look for a job." SHENZHEN, China. Most of the 2,100 workers here are poor migrants from the countryside who have come to this industrial hub in southern China for jobs that pay about $120 a month. A sign on the wall reminds them of their expendability in a nation with hundreds of millions of surplus workers: "If you don't work hard today, tomorrow you'll have to try hard to look for a job." More than 80 percent of the 6,000 factories in Wal-Mart's worldwide database of suppliers are in China. Wal-Mart estimates it spent $15 billion on Chinese-made products last year, accounting for nearly one-eighth of all Chinese exports to the United States. More than 80 percent of the 6,000 factories in Wal-Mart's worldwide database of suppliers are in China. Wal-Mart estimates it spent $15 billion on Chinese-made products last year, accounting for nearly one-eighth of all Chinese exports to the United States.

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57 The aim of lecture 6 is: To understand the current economic and political (dis-)Order To understand the current economic and political (dis-)Order To sum-up the theoretical and analytical dimensions of the previous lectures To sum-up the theoretical and analytical dimensions of the previous lectures To provide the basis for the discussion of the projects and of the theses To provide the basis for the discussion of the projects and of the theses

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58 1. The crisis of neo-liberal economics 2. From a Triadic to a Multipolar System 3. The rise of U.S. unilateralism 4. The emergence of the forms of resistance to globalization

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59 1.The crisis of neo-liberal economics. The end of development Growth has not materialized: in the last two decades (1980-2000) the rate of growth has been less than those of the previous decades (1960-1980) in many regions of the world, despite two major oil crises. Growth has not materialized: in the last two decades (1980-2000) the rate of growth has been less than those of the previous decades (1960-1980) in many regions of the world, despite two major oil crises. African countries are those in the worse situation: during 1960-1980 they had a 34 per cent growth of GDP in 1980-2000 GDP fall of 15 per cent. African countries are those in the worse situation: during 1960-1980 they had a 34 per cent growth of GDP in 1980-2000 GDP fall of 15 per cent. In the last 20 year development measured with HDI is improving to a lower rate than before 1980 also in rich countries and is becoming negative for some poor countries. China and India are among those that show a stable growth of HDI. In the last 20 year development measured with HDI is improving to a lower rate than before 1980 also in rich countries and is becoming negative for some poor countries. China and India are among those that show a stable growth of HDI. Poverty cannot be studied as a TREND: is the MAGNITUDE of the problem that cannot be accepted Poverty cannot be studied as a TREND: is the MAGNITUDE of the problem that cannot be accepted Economic convergence has not taken place. Income disparity increases with the opening of markets. China is a good example of convergence within localities but divergence along the rural-urban axis. Economic convergence has not taken place. Income disparity increases with the opening of markets. China is a good example of convergence within localities but divergence along the rural-urban axis.

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60 2. From a Triadic to a Multipolar System The decline of Japan The decline of Japan The crisis of the European Union The crisis of the European Union The American vulnerability (energetic and economic) The American vulnerability (energetic and economic) The rise of BRICs The rise of BRICs

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61 1. The period 1992-2001 The rise of the neo-conservative groups in the U.S. The rise of the neo-conservative groups in the U.S. The Wolfowitz memorandum The Wolfowitz memorandum The pre-emptive strategy of war The pre-emptive strategy of war The desperate need of war The desperate need of war The economy prevails over politics (global market dominance) The economy prevails over politics (global market dominance) 3. The U.S. unilateralism

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62 4. The emergence of resistance to globalization World Social Forums World Social Forums Independent NGOs Independent NGOs The rise of the political consumer The rise of the political consumer Peace movements Peace movements Social Districts: the community against the multitude of individuals Social Districts: the community against the multitude of individuals

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64 1. TRADE Trade has increased but is asymmetrical Trade has increased but is asymmetrical Trade has liberalized but is conditional Trade has liberalized but is conditional Trade remains concentrated within the Triad Trade remains concentrated within the Triad

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65 2. Foreign direct investments Employment creation is in the low skilled labor intensive sectors Employment creation is in the low skilled labor intensive sectors The worker is not anymore the consumer The worker is not anymore the consumer Technology transfer is limited, but can be pursued Technology transfer is limited, but can be pursued

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66 3. Flexibility Flexibility in the modern firms has created insecurity Flexibility in the modern firms has created insecurity The Flexible production has created dualism and polarization The Flexible production has created dualism and polarization ‘ Flexibilization ’ (de-centralization and de-localization) has destroyed local communities ‘ Flexibilization ’ (de-centralization and de-localization) has destroyed local communities

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67 4. Property Rights The diffusion of innovation is limited by tight enforcement of property rights The diffusion of innovation is limited by tight enforcement of property rights Property right systems allowed the expropriation of indigenous knowledge Property right systems allowed the expropriation of indigenous knowledge

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68 5. Technological change Technological innovation is substituting labor (technology induced unemployment) Technological innovation is substituting labor (technology induced unemployment) Technology is applied in both bad and good ways. But the bad ones prevail. Technology is applied in both bad and good ways. But the bad ones prevail. Technological change served the interested of the richest and strongest lobbies Technological change served the interested of the richest and strongest lobbies Adoption and diffusion of new technologies is not a natural process Adoption and diffusion of new technologies is not a natural process

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69 The process of diffusion of innovation Innovators Early Adopters Early Majority Laggards Late Majority Number of Adopters Time Rents creation In the 1950s 1960s agricultural economists in the US made studies on the diffusion of hybrid corn Origin Slope Ceiling

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70 Possible titles for projects/theses: 1. 1. Title: Discuss cases for and against mathematics in economics. Possible Research question: 2. 2. Title: Compare Marxist and Post-keynesian accounts of globalisation. Possible Research question: what is the future of the Nation-State? 3. 3. Title: Statistics or Economic Problems? Possible Research question(s): Why do rates of unemployment differ between US and Europe and between the European countries e.g. Scandinavia vs. Germany, UK and France? 4. 4. Title: Inequality in Rich countries: the case of Denmark. Possible Research question(s): What determines the distribution with regard to the share of profit and wage and with regard to the personal income (represented by the Gini-coefficient)? Give some causal explanations of the development in distribution within the last 30 years in Denmark. 5. 5. Title: The Macroeconomic effects of the European Monetary Union. Possible Research question : To what extent would you expect a correlation between the development in the exchange rate and the balance of payments (current account and capital account). What are the economic conditions which should be fulfilled for a well functioning monetary union to be established? To what extent does the Euro- zone conform to these requirements? 6. 6. Title: Trade and financial flows in Asia. Possible Research question : What kind of integration is taking place? Is a regional phenomenon or not? Who benefits? 7. 7. Title: To protect or not protect? Possible Research question : Does property rights foster or hinder innovation? 8. 8. Title: The local impact of transnational corporations: the case of Wal-Mart in China. Possible Research question: What are the benefits of foreign direct investments on the local economy? 9. 9. Title: The disturbing rise of the poor. Possible Research question: Why convergence has not materialized? And where it has? 10. 10. Title: A Changing Global Order. Possible Research question: How important is the exchange rate USD/RMB in the equilibrium between China and USA? 11. 11. Title: Open regionalism vs Meso-regions. Possible Research question: Is the Meso-region an alternative to Globalization? 12. 12. Title: Technology for the people and against the people. Possible Research question: What are the driving forces behind technological progress? Is technology neutral? 13. 13. Title: In search of Global Governance. Actors and Institutions in the Global Economy: Possible Research question: How capitalism has changed in the last 20 years? Who is ruling the global market? 14. 14. Title: Comparing Regional Integration Agreements. Possible Research question: Can self-reliance be achieved today? 15. 15. Title: The economy of Access and the Privatization of the Common Goods. Possible Research question. Is another World possible? How common goods can be managed in the global economy?

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71 What is to be done next? Prepare for the next workshop a presentation of 3 pages of your project, in which is explained the project field and some of the books and reports you intend to use for it. Prepare for the next workshop a presentation of 3 pages of your project, in which is explained the project field and some of the books and reports you intend to use for it. Date for the workshop for the Master E&A and Socrates students is: Monday 15th March 15.00-17.00 Date for the workshop for the ESST students is: Friday 19th March 12.15-14.15